On July 14, the Southern District of New York denied Tiffany’s claims of direct and contributory trademark infringement against eBay. The court agreed with eBay that, as a legitimate seller of Tiffany goods, the online auctioneer had the right to use the Tiffany marks under the nominative fair use doctrine. It also rejected Tiffany’s demand that eBay be held jointly and severally liable for sales made on eBay.com by third parties.

Tiffany instigated this suit against eBay after its research showed that the majority of claimed Tiffany products for sale on eBay were counterfeit. While eBay provided reporting services for both users and trademark holders to notify its fraud division of counterfeit items, Tiffany had requested a more proactive solution: removal of all sellers placing five or more Tiffany items up for sale and suspension of the use of the Tiffany mark on the eBay site and in eBay advertising.

Brad Stone at the New York Times notes that courts in two prior international cases brought by luxury brands (Rolex in Germany and Louis Vuitton in France) had ruled against eBay. The divergent opinions may pose a challenge to eBay’s operation of a single global marketplace.

Looking first at direct infringement, Judge Richard J. Sullivan ruled that eBay’s many sales of genuine Tiffany products gave it the right under the nominative fair use doctrine to point out on its site that such items were available. In addition, he ruled that eBay’s nominative fair use rights extended to the use of the Tiffany name in advertising as long as legitimate sales of Tiffany items on its site were taking place.

Turning to contributory infringement, Judge Sullivan analogized eBay to a flea market and not an online classified ad service, and therefore found that eBay was in enough control of its users’ actions to apply the contributory infringement test in Inwood Labs v. Ives Labs, 546 U.S. 844 (1982). However, he also found that eBay’s termination of listings of counterfeit items immediately upon notification showed that eBay did not “know or have reason to know” of infringement under the Inwood test. He rejected Tiffany’s theory that eBay’s “general knowledge” that infringers were using its service should have made it liable under Inwood. Tiffany had unsuccessfully argued that eBay should have “reasonably anticipated” infringement.

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[...] international outcomes with respect to trademark infringement claims. The S.D.N.Y. ruling in Tiffany v. eBay held that eBay did not have to increase its efforts to police trademark infringers, while courts [...]